Feasibility Study for a Shipping and Logistics Company in Egypt

How a shipping and delivery company makes and loses money

A small delivery company sells "delivery attempts": it picks up a parcel from an online store, sorts it, and a courier on a motorcycle takes it to the customer's door, where it is either delivered and paid for in cash or refused and sent back. Revenue is a fee per delivered shipment and a smaller fee per return, while most costs are fixed: couriers' salaries, motorcycles, the sorting point and the tracking system. So a shipping and logistics company feasibility study starts with one question: how many delivery attempts does each courier make a day?

When routes are full, the cost per shipment falls below its price; when they are thin, it rises above it whatever the price. On top of that come three risks specific to this business: a return uses a full trip for half a fee, cash-on-delivery money passes through your hands but is not yours, and a large client may pay months later. The store's own numbers are in an online store feasibility study.

Licences: the Postal Authority for parcels, the land transport regulator for trucks, Customs for clearance

• Parcel delivery: on 13 September 2022 the National Postal Authority warned against dealing with companies distributing e-commerce shipments or doing shipping and delivery without "a valid licence from the National Postal Authority"¹. According to the Authority's lawyer, in a report published on 6 April 2025, the licence is obtained from the Authority's postal market regulation sector under Postal System Law No. 16 of 1970, whose Article 29 punishes violators with imprisonment of up to six months and a fine of up to EGP 200, or either penalty². A document list published in June 2023 for first-time applicants includes "a feasibility study covering 3 years"³. We found no official source for the current list, the fee or a minimum capital, so ask the Authority.
• Goods transport by truck: Article 15 of Law No. 73 of 2019 establishing the Internal and International Land Transport Regulatory Authority bars domestic and international goods transport by truck without a licence from the Authority, which may delegate governors to license trucks under 8 tonnes; Article 40 punishes violators with imprisonment of up to three months and a fine of up to EGP 50,000, or either penalty⁴. Article 13 requires the Authority's approval before a company or branch for passenger or goods transport is licensed to be formed⁴. The law's executive regulations, issued by Decree No. 90 of 2021, apply to goods transport for hire, own-account transport, freight brokerage and goods vehicle rental⁵.
• Customs clearance: clearing goods for third parties requires a Customs Authority licence valid for two renewable years, and every clearance office deposits a cash guarantee of EGP 50,000, or EGP 100,000 for a licensed legal person (Articles 51 and 53 of Customs Law No. 207 of 2020)⁶. Those who practise clearance must, among other conditions, be Egyptian, hold a university degree and pass the Authority's training and examination (Article 52)⁶. For the importer's own numbers see an import and export company feasibility study.

Maher Consulting Firm can handle the company formation.

Wages and fuel: the mandatory figures

• Wages: the private-sector minimum wage is EGP 7,000 a month from 1 March 2025⁷, and the employer pays 18.75% of the insurable wage while the employee pays 11%⁸.
• Fuel: 80-octane petrol rose from EGP 17.75 to EGP 20.75 a litre and diesel from EGP 17.5 to EGP 20.5 from 10 March 2026, and on 15 October 2026 the automatic pricing committee kept prices unchanged⁹.

Illustrative example: a delivery company with 12 couriers in Cairo and Giza

Assumed figures to show the method, not market prices. All amounts are before VAT:

• Capacity: 12 couriers on company motorcycles, each making 30 delivery attempts a day over 26 working days, or 9,360 attempts a month.
• Prices: we assume online stores pay EGP 60 per delivered shipment and EGP 30 per return. Actual prices vary with the delivery zone, the weight and the store's volume, which is why this differs from the EGP 75 including returns assumed on the online store page. From month 3 a large client (a retail chain) adds 1,500 attempts a month at EGP 50 and EGP 25, invoiced at month end and paid 30 days later.
• Delivery and collection: 85% of attempts are delivered and 15% come back. 80% of store shipments are cash on delivery, averaging EGP 850, remitted to the stores weekly after deducting shipping fees, so collected cash stays with you for 7 days on average.
• Variable cost per attempt: petrol EGP 2.18 (3.5 km × 3 litres per 100 km × EGP 20.75), a EGP 1 label, a EGP 4 incentive per delivered shipment, 0.3% of cash collected for transfers to stores and cash shortages, and one lost shipment in every 1,000 delivered compensated at EGP 850. Total EGP 9.04 per store attempt and EGP 7.30 per large-client attempt.
• Fixed monthly costs: salaries EGP 156,500 (12 couriers × 8,000, two sorters at 7,500, an operations officer 10,000, two customer service staff at 8,000, an accountant and cashier 11,000, and the pickup van driver 8,500); employer's social insurance 29,343.75; motorcycle depreciation 25,000 (EGP 75,000 each over 36 months); their maintenance, licensing, insurance and phone lines 15,600; rent of a van to collect parcels from stores and take returns back 18,000 and its diesel 5,116.8 (80 km × 26 days × 12 litres per 100 km × EGP 20.50); sorting point rent 25,000; tracking system 8,000; utilities and sundries 7,000; marketing 10,000. Total EGP 299,560.55.
• Start-up costs: EGP 1,200,000: 12 motorcycles 900,000, delivery boxes and phones 72,000, sorting point deposit and fit-out 120,000, van deposit 18,000, system set-up 30,000, incorporation and licences 60,000 (replace with a real quote).
• Volume: store shipments of 4,000 attempts in month one, then 5,000, 5,500 and 6,000, and 6,500 from month 5, or 8,000 with the large client (85.5% of capacity).

Cost per shipment by route utilisation

A store attempt brings in EGP 55.50 (85% × 60 + 15% × 30) and leaves 46.46 after variable costs; a large-client attempt leaves 38.95. Break-even = 299,560.55 ÷ 45.06 = 6,649 attempts a month, 71% of capacity, or 21.3 attempts per courier per day. Average revenue is EGP 63.25 per delivered shipment. The table keeps the example's mix:

The price never changes; only the number of attempts carried by the same couriers does.

Cash, month by month

(Paid out = variable and fixed costs excluding depreciation, with start-up costs in month 0; months 6 to 11 equal month 5.)

The company passes break-even in month 3 and earns EGP 60,883 a month from month 5, or EGP 358,199 in its first year, before taxes and an owner's salary. The deepest cash need is EGP 1,360,895 in month 3, mostly the motorcycles. The real danger is the last column: start with EGP 1,400,000 and EGP 788,824 of it is left in month 12, yet the bank account shows EGP 1,581,282 because EGP 792,458 belongs to the stores. The difference between profit and cash is covered in cash flow for small businesses.

What if fuel rises, returns grow or the large client pays late?

The same example with one assumption changed for the whole year, except the volume drop, which starts in month 5:

• Fuel adds EGP 3,269 a month, less than 1% of the cost per shipment, because petrol is only 4.7% of the cost of a delivered shipment by motorcycle.
• Utilisation is the deciding number: 20% fewer shipments turn a EGP 60,883 profit into a EGP 13,460 monthly loss, because 20.5 attempts per courier a day is below break-even.
• Returns: ten more points of refusals take EGP 18,044 off monthly profit, because a return is a full trip for half the fee. Put the return fee and a refusal threshold in the contract.
• The large client is 16% of revenue, but what it leaves after variable costs (EGP 58,423) equals 96% of monthly profit. If it pays after 90 days, an extra EGP 138,750 sits with it for as long as the contract lasts.

Own fleet or couriers paid per shipment?

A salaried courier on a company motorcycle costs EGP 12,883 a month fixed (salary, social insurance, depreciation, maintenance and phone) plus EGP 5.58 per attempt (petrol and incentive). Assume a freelance courier with his own motorcycle takes EGP 30 per delivered shipment and EGP 10 per return, an average of EGP 27 per attempt. The two models break even at 601 attempts per courier a month, or 23.1 a day. At 25.6 attempts a day, as in the example, the own fleet saves EGP 16,770 a month across the team; at 20.5 it costs EGP 17,504 more. Per-shipment couriers also remove EGP 900,000 of motorcycles from start-up costs, but give you less control over timing and over the cash they carry. So size your own fleet to confirmed demand and use per-shipment couriers for peaks.

Cash-on-delivery money is not yours

In month 12 the couriers collect EGP 3,757,000 for the stores, 8.7 times your revenue. Weekly remittance leaves EGP 876,633 of collected cash with you on average, of which EGP 792,458 belongs to the stores after your fees, 13 times monthly profit.

• Your revenue is the shipping fee only, not the value of the goods you collect.
• A separate bank account for store money, and a daily reconciliation of each courier's cash against the system.
• Never fund expenses from this money.
• Put the remittance date in the contract, along with how fees and returns are deducted from it.

The general VAT rate is 14%, and anyone whose sales reach the registration threshold registers within 30 days of reaching it¹⁰; the threshold is EGP 500,000¹¹. In the example, cumulative revenue passes it in month 3.

Freight between governorates: the empty return trip

In goods transport by truck, diesel and the empty return decide the profit. An illustrative example: a medium truck rented with its driver between Cairo and Alexandria, 220 km each way, using 30 litres per 100 km, so round-trip diesel costs EGP 2,706 (440 km × 30 litres per 100 km × EGP 20.50). Assume the truck and driver cost EGP 2,500 a day, the driver's trip allowance EGP 600, and tolls and loading EGP 700. The trip costs EGP 6,506, and the price is EGP 5,000 per one-way load:

You need a full-price return load on more than 30% of trips to break even. Renting the truck does not take you outside the rules: freight brokerage is among the activities the executive regulations cover⁵. Diesel here is 41.6% of the trip cost, so an extra EGP 3 a litre adds EGP 396 per trip (6.1%), against less than 1% for motorcycle delivery.

Common mistakes in a shipping company feasibility study

1. Costing a shipment at the courier's full capacity rather than at the volume you actually expect.
2. Assuming every attempt is delivered, or that a return costs nothing.
3. Mixing cash-on-delivery money with the company's revenue and cash.
4. Relying on one large client with no scenario for late payment or its departure.
5. Pricing freight between governorates on the outbound leg only and forgetting the empty return.
6. Starting before a licence from the National Postal Authority or the land transport regulator.
7. Forgetting lost and damaged shipments and couriers' cash shortages.

To work out break-even and capital in detail, see break-even and working capital.

Frequently asked questions about a shipping company feasibility study

Sources

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